Espaniol ya mismo……….
Ascendant’s 2008 First Quarter Reports and What the Company is Not Telling
As expected, Ascendant’s directors have risen to the occasion. The occasion being distorting and withholding information which might reflect badly on the company as reported on its latest quarterly report*.
Loss of Concessions.
The company does a great job of not admitting that the government basically took away their Junin mining concession (Golden 1 and Golden 2) This is what the company says in its latest report:
“In late January 2008, Ascendant received notices from the Regional Director of Mines, Province of Pichincha, that purport to nullify two concessions, the Golden 1 and Golden 2, that form part of the Junin copper/molybdenum project in Ecuador on the basis that these concessions were granted unconstitutionally”.
The government didn’t ‘purport’ to nullify the concessions- it nullified them, plain and clear…. AND legally. Whether a higher court or the Ministry rule otherwise in the future on appeal is totally besides the point. What the company should have told its investors was that their concessions were abolished but that they were negotiating with the government, appealing, begging, threatening to sue, etc.- anything but that the government purported to nullify their concessions. So, legally, right now they do not own Golden 1 nor Golden 2. And even if they were to win in court some day, the Mining Mandate below assures that the concessions will stay out of their hands.
The Mining Mandate.
On its latest report, the company gives the impression that the Mining Mandate, approved by a 95-1 margin by the nation’s Constituent Assembly on April of 2008, merely froze mining activities in the country. True enough, but the Mandate also abolished concessions rights – without recourse to payment- of 80% of the country’s concessions- including Ascendant’s and any other that: a) threatened water resources; b) was not up to date on its payments to the government; c) did not have an Environmental Impact Study approved, and it limits concessions to 3 concessions per company (including subsidiaries). This sure seems material in nature. The Mandate also called for the creation of a state mining company. Under the Mandate there is no guarantee whatsoever that the companies will recuperate their concessions once the new mining law is drafted. The law will set forth totally new conditions on which to grant mining concessions and approve mining activities, and they are bound to include payment of royalties, a high windfall profit tax, a higher income tax bracket for mining companies, much stricter social and environmental regulations, and a steep per-hectare registration fee. And, there’s a very good chance the state-owned mining company will usurp the juiciest mining projects. The new law, by the way, cannot modify or be in conflict with the Mandate.
In other words, a completely new ball game.
As for the company not knowing too much about the Mandate, it claims that:
“As Ascendant’s information on the new Mining Mandate has been substantially obtained from the press, the information provided by the Company is subject to uncertainty”
This is a bit far-fetched. The complete text of the Mining Mandate was put on the Constituent Assembly’s web page within days of its April 15th approval. Just in case the company doesn’t know how to access it, here it is: asambleaconstituyente.gov.ec Search for Mandato Minero. www.informineria.org also has a copy of it, as well as many other sites (google has 9,950 references of it in English, and 29,000 in Spanish).
Exploration? In Junin?
The company, once again, claims that it has spent money on exploring in the Junin concessions. This is patently false. The last exploration that took place in the Junin area was done by Bishimetals, back in 1996. In case there is any doubt about the above statement, Ascendant Copper Corporation has not spent a single penny on exploratory activities in its Junin project. If you look back in the last few reports, you will find the company saying it has spent millions of dollars on this. Below is the latest claim:
The Company used $1,745,000 in operating activities during the three months ended March 31, 2008, primarily for general and administrative expenses and exploration costs relating to the Junin and Chaucha properties (emphasis mine)
The Problematic Junin Deposit (made more problematic by damn termites!!)
On the latest report, the company makes reference to the Micon International’s NI 43-101 report, which designated the Junin deposit to be four times larger than what the Japanese inferred through years of exploration. However, the company failed to inform the public in its latest report that Micon publicly said last year that it can no longer verify its claim, due to damage sustained to the original core samples by, among other factors, termite damage. If a company was, for some obscure reason, wanting to cover up misleading information it generated, this is a damn good way to do it (of course Decoin is not suggesting anything of the sort). The company also failed to inform the public that there a complaint was filed in Canada questioning the procedure used by Micon to assess Ascendant’s Junin’s mineral deposit.
Loss of Properties.
The company did not report the loss of 17 of its properties in the Junin area. The company permanently lost title to these lands, land which were sitting on top of the copper deposit, when the National Institute for Agrarian Development (INDA) legally abolished the company’s ownership rights due to illegalities in the granting of the original land titles. Given that the company had said that part of their strategy to acquiring properties in the Junin area was to gain access to their concessions- this could constitute a material event.
Those Pesky Obstacles.
The obstacles listed above are just some of the many the company faces. For example, there is still the fact that most of the Junin concession is covered in primary cloud forests harboring dozens of threatened mammals, birds and amphibians (including the critically endangered brown-faced spider-monkey, jaguars, and spectacled bears). The area is also extremely rich in archeological sites. Under Ecuadorian law, mining in these areas is illegal. Others include the fact that there is just not enough water in the site or adjacent areas to undertake a mining project the size envisioned by Ascendant; the long-standing opposition by local governments and communities, and of course, the fact that there is a County government law that prohibits mining in native forests! Not to mention that the area above the minerals is not only in primary and secondary native forests, but that it has been managed and occupied by the Junin Community since 1997 and forms part of its community tourism project!
Then there was Telimbela…. And Chaucha
With nothing to show as far as real exploratory results, a mining mandate freezing all mining activities, no environmental impact study approved- nor likely in the near or mid-term future….. well, you get the picture. As for Chaucha:: no exploration can take place; and, if it hasn’t already, the company may lose its concession. And wasn’t it last year that the Chilean miner Antofagasta pulled out of the deal it had to develop this site because of very poor results?
The Gall of it All…
And, in the midst of this rapidly sinking ship, the company increases salaries and wages!!! Long live the spending of other people’s money!!
* The report can be dowloaded from the company’s web page (ascendantcopper.com) investors section